RealPage, a leading provider of real estate software, filed a lawsuit against the City of Berkeley, California, this week, challenging a new ordinance that bans the use of algorithmic pricing tools for rental properties.
The lawsuit, filed in federal court, seeks to block the ordinance from taking effect on April 24, claiming it violates constitutional free speech protections and was based on misinformation about how rental pricing technology actually works.
The Berkeley City Council passed the ordinance on March 25.
“This ordinance prohibits the sale or use of algorithmic devices for the purpose of setting rents to bring immediate relief to Berkeley tenants, as well as to put landlords who have been using these devices on equal footing with those who are willing to adhere to fair standards for setting rental rates,” wrote Debbie Potter, chair of the Berkeley Housing Advisory Commission in a memo to council members ahead of the vote.
However, RealPage argues this ban would prevent property managers from using mathematical tools and public data to make informed pricing decisions.
“This ordinance was adopted based on false claims about our revenue management software,” Dana Jones, RealPage president and CEO, said in a statement. “Our technology contributes to a healthier and more efficient rental housing ecosystem that benefits both renters and housing providers.”
The company maintains its software merely provides recommendations that property owners can accept or reject, noting that customers decline the suggested prices more than half the time. RealPage emphasizes that its algorithms make pricing recommendations in all directions based on internal supply and demand data from specific properties combined with publicly available market information.
RealPage is in the legal crosshairs of the Justice Department and several state attorneys general, who filed an antitrust lawsuit against the company in August 2024 in the U.S. District Court for the Middle District of North Carolina. The complaint alleges RealPage engaged in an “unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments.”
A criminal inquiry into RealPage by the Justice Department was dropped late last year.
The controversy highlights growing tensions over rental housing affordability in high-cost markets like Berkeley. Critics of pricing algorithms claim they contribute to rapidly rising rents, while RealPage and its supporters argue the real issue is insufficient housing supply.
“If Berkeley wants to bring down prices, it should just build more housing,” said Will Swaim, president of the California Policy Center, in a recent Mercury News op-ed. “Housing won’t become affordable by banning algorithmic math.”
RealPage’s suit contends the City’s ordinance could have unintended consequences for the rental market, potentially discouraging property development and improvements that might help address housing shortages.
The company says its software, which has been in use for two decades, aids compliance with Fair Housing laws and rent control regulations. It also noted that the system doesn’t use any personal or demographic data to generate recommendations.
For real estate professionals, the lawsuit is a test case for how technology can be regulated in property management. As more jurisdictions consider similar measures, the outcome could impact how rental properties are priced and marketed in other housing markets.
Housing advocates maintain that algorithmic pricing contributes to market synchronization that drives up rents, while property managers counter that the tools simply reflect market realities and help them operate more efficiently in a complex market.
The case will be watched closely by real estate professionals as it raises fundamental questions about technology use in property management and local government authority to regulate pricing tools in housing markets.
